NSW Government should buy and demolish 5300 homes with Mr Fluffy insulation: report

More than 5300 NSW homes may be riddled with deadly Mr Fluffy asbestos insulation and the state government should demolish and buy affected properties, a parliamentary report has found.

The findings, unanimously supported by government, Labor and crossbench MPs, leave the Baird government potentially facing a $5 billion bill should it follow the Australian Capital Territory government's lead and buy back the homes.

Moving on: Chris and Charmaine Sims with their son Zac and daughter Alma. They are leaving Mr Fluffy behind after buying a new home in Kambah in the ACT. Photo: Jeffrey Chan

Mr Fluffy is the former contractor that used loose-fill asbestos fibres for roof insulation in homes in Canberra and parts of NSW in the 1960s and 1970s. There are fears that the fibres pose acute health risks.

NSW authorities are investigating how many properties contain loose-fill insulation. The report said 59 homes have been identified so far "with the potential for there to be many hundreds more".

PricewaterhouseCoopers has been commissioned to investigate the extent of Mr Fluffy fibres in NSW. An interim report said that, based on the firm's installation capacity, up to 5376 homes may contain the insulation.

Using a different calculation, based on the distance between Canberra and affected NSW council areas, the assessors found up to 1110 homes may be affected. Their report said the discrepancy between the figures highlighted the need for further investigation.

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The parliamentary report condemned "historic inaction of successive NSW governments in responding to this issue". The gravity of evidence received by the inquiry promoted the report to be released two months earlier than expected.

It found the presence of loose-fill asbestos fibres rendered a home "ultimately uninhabitable", posing risks to residents, visitors and the public.

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The report recommended a statewide buy-back and demolition scheme for all affected residences, based on the ACT model.

The federal government is providing a concessional loan of up to $1 billion to the ACT to buy back and demolish about 1000 houses affected by Mr Fluffy. The NSW government may face a bill five times that, if the cost is extrapolated to the PricewaterhouseCoopers worst-case estimate.

The federal government has refused financial assistance to NSW, saying legal responsibility for affected homes lies with the state government.

The parliamentary report said owners of Mr Fluffy homes should be legally required to disclose that their home is affected, so prospective buyers are informed.

It also called for affected NSW properties to be tagged to protect tradespeople and emergency services workers. In the case where home occupants wished to immediately leave their homes, financial assistance for crisis accommodation and short-term remediation work should be provided, the report said.

Free ceiling inspections are presently available for NSW properties built before 1980 in areas thought to be affected. The report said such testing should be mandatory – potentially involving tens of thousands of homes.

Twenty-six NSW council areas have been identified as potentially affected by loose-fill asbestos. In Sydney, they include Manly, Parramatta, North Sydney, Ku-ring-gai, Bankstown, Warringah and The Hills councils.

A spokesman for Finance and Services Minister Dominic Perrottet said the government would consider the report.